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For each of the following pairs of Treasury securities (each with $ 1 comma 000$1,000...

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Question

Finance

For each of the following pairs of Treasury securities (each with

$ 1 comma 000$1,000

par value), identify which will have the higher price:

a. A three-year zero-coupon bond or a five-year zero-coupon bond?

b. A three-year zero-coupon bond or a three-year

4 %4%

coupon bond?c. A two-year

5 %5%

coupon bond or a two-year

6 %6%

coupon bond?

a. A three-year zero-coupon bond or a five-year zero-coupon bond?

Which will have the higher price?(Select the best choice below.)

A.

A five-year zero-coupon bond, because the present value is received sooner and the future value is higher.

B.

A three-year zero-coupon bond, because the present value is received sooner and the future value is higher.

C.

A five-year zero-coupon bond, because the future value is received later and the present value is higher.

D.

A three-year zero-coupon bond, because the future value is received sooner and the present value is higher.

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